2- If the financial markets anticipated a major financial crisis, we would expect the major impact on the risk-return line would be to have the line:

A. shift down

B. become flatter.

C. shift up.

D. become steeper.

_______________________________

7- In the U.S. the largest source of funding is - and is the least.

A. corporate bonds bank loans

B. financial markets commercial paper

C. by financial institutions common stocks

D. common stocks financial institutions

_______________________________

11- Regarding financial institutions regulations, all of the following are true except:

A. they normally raise financial institutions costs.

B. tight regulations can provide an incentive for bribery

C. their burden is less on small, rather than on large, financial institutions.

D. There are no exceptions. All these answers are correct

_______________________________

12- Shadow banks:

A. Are regulated by the FDIC

B. Are reliant on funding from both deposits and commercial paper

C. Could be a finance company borrowing from a MMMF to make auto loans

D. have similar regulations to commercial banks

_______________________________

13- The stock price of a corporation usually rises when it announces that it will:

A. Issue common stock

B. Issue straight bonds

C. Issue convertible bonds

D. None of these answers is correct

_______________________________

14- It has been found that individuals are more likely to live near rivers if they have flood insurance. This would be an example of:

A. search costs

B. risk aversion.

C. adverse selection.

D. moral hazard.

D. become steeper.